On Wednesday, The Supreme Court had observed that Explanation 3C to Section 43B of the Income Tax Act, 1961 is only clarificatory and meant to hold back the misuse of Section 43B, which lays down that income tax deductions on certain transactions can only be claimed after actual payment, Justices RF Nariman and BR Gavai opined.
The Bench also found that the issue of certain debentures, constituted a discharge of the liability to pay interest on loans availed by the assessee. Therefore, the assesee is entitled to claim deduction under Section 43B of the Income Tax Act for the payment of such interest, the top Court held.
Section 43B deals with certain kinds of deductions that can be claimed. Section 43B (d) of the Income Tax Act and Explanation 3C to this section were in focus. Section 43B (d) refers to interest on loans.
Section 43B to claim an income tax deduction. Explanation 3C was inserted to curb the misuse of 43B.